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On February 15, 2011, the SBA is rolling out two new loan initiatives aimed at increasing the number lower-dollar loans to small business in underserved communities: (1) Small Loan Advantage and (2) Community Advantage 7(a) Loan will both offer a streamlined application process for SBA 7(a) loans up to $250,000 to be used for general business purposes, such as working capital, the purchase of equipment, and even the purchase of commercial real estate.
Under the SBA's new Small Loan Advantage larger banks (also called "preferred" lenders) will be able to offer loans up to $250,000, and get them approved quickly by submitting a single-page credit memo to the SBA. There are about 630 banks that are considered preferred lenders which will have the authority to approve loans independently. The loans are guaranteed at 85% up to $150,000 and 75% over $150,000. According to the SBA, loans submitted electronically "will be approved in minutes," and other applications will be approved within one business day.
The second initiative, called Community Advantage, aims to get SBA-backed loans to underserved communities, such as minority-, women-, and veteran-owned businesses, as well as firms in lower-income or rural areas. The Community Advantage program encourages borrowers to develop a business plan and work with advisors. Instead of banks, the three-year pilot program operates via alternative, nonprofit community-minded lenders like the Valley Economic Development Center in Van Nuys (which previously did not have the ability to offer SBA Loans). Loans should be available starting in June of 2011, and applications should be approved within 5 to 10 days.
Small Loan Advantage Program Starts February 15, 2011.
The primary purpose of the Small Loan Advantage program is to encourage existing SBA Preferred lenders (primarily banks) to make smaller loans (up to $250,000), which often benefit businesses in underserved markets. To encourage these loans, which are often less profitable, the federal government will guarantee 85% of a loan up to $150,000 and 75% of a loan between $151,000 and $250,000. To ensure efficiency, the Small Loan Advantage features: (1) streamlined paperwork, with a relatively simple two-page application for borrowers; and (2) an expedited approval process-- the SBA will either approve, or deny, loans submitted under the Small Loan Advantage Program within minutes (if electronically submitted), and within 5 to 10 days is submitted in some other form.
The Community Advantage Loan Program Should Start in Mid-March.
The Community Advantage is a three year pilot initiative whose main purpose is to increase the number of SBA 7(a) lenders. These loans who reach underserved communities, targeting community-based, mission-focused financial institutions which were previously not able to offer SBA loans. These potential new SBA lending partners include Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit micro lending intermediaries.
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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.